The intent of homeowners insurance is a form of protection of your dwelling and personal items from total disaster and loss. Anyone who has ever gotten a mortgage knows that presenting proof of homeowners insurance is one the requirements at closing. The borrower is at the very least required to purchase insurance for the value of the mortgage loan.

Nevertheless, you cannot make a decision as to how much homeowners insurance you are going to need simply based on the amount of the mortgage. You are going to need insurance that is adequate enough to protect you, your family and your possessions.

Should your home be totally destroyed, you are going to have to rebuild it or get a comparable home. Your insurance should provide enough coverage so that you will be able to replace your current home with a comparable home if something should happen to it. According to the Insurance Institute, you should find out the average cost per square foot to build a house in the area where you live, then multiply the cost by the square footage of your current dwelling. You now have an estimate of the minimum insurance you are going to need on your home.

However, if something calamitous should happen to your house, it is likely that you will lose all your personal belongings. In these trying times, there are not too many ordinary people who have enough cash in their bank accounts to be able to go out and buy new items to replace what was lost. You need to decide whether you want insurance that will pay you the actual value of the item (depreciation is taken into account), or whether you want replacement cost insurance. Replacement cost insurance is more expensive, but it comes with the peace of mind of knowing everything can be replaced if it should be lost. You would have to decide whether paying extra is worth it or if you can deal with getting actual value.

If you have luxury items, standard homeowners insurance policies come with limits as to how much will be paid out for things considered high-end. These items include fur coats, collections, jewelry or anything else that is unique and expensive. In this case, you might want to consider purchasing endorsement or floater insurance that covers those unique and nearly irreplaceable items.

Once you have taken everything into account, you will have a good idea of how much insurance you are going to need to fully cover yourself from calamitous events. You can call an insurance company and they will more than likely come out, make an inspection and give you an estimate on homeowners insurance. Since you have already taken the time out to make a determination, you will know whether the insurance company is being ethical with you.

If you feel they are offering too little or too much, you can always contact another insurance company. You will have the advantage of already knowing how much insurance you need. It is good practice to get several estimates anyway, so that you do not end up with too little or too much insurance.

Comprehensive insurance policies are also called ‘All risks’. Both names can be a little bit misleading, as although comprehensive insurance does cover you against damage from fortuitous events, there are actually some exclusions from cover which you should know about. These exclusions can be found in the small print at the bottom of your policy, but in general people don’t read the small print on their policy. Therefore, we are going to highlight some of the most common exclusions.

As reported by Youi Car Insurance, not all of the money you claim will be paid by the insurance company, but most companies will insist on an ‘excess’ clausen which is an amount of money you should pay towards a claim. This was brought in so people should think before claiming. Should the accident be designated as someone else’s fault, you can claim back the excess from the culprit’s insurance company.

You should look at whether you have a ‘loss of use’ clause in your small print. Do you get a ‘courtesy’ car whilst it is being repaired? What
happens if your new car is written off, or even loses 50 or 60% of its value because of the accident? A good insurance policy will give you a new car in this case as long as your car was less than 12 months old. Remember that an insurer is paying to cover a fortuitous event. They won’t pay for wear and tear on your car, or any maintenance or servicing. This goes as far as instructing the garage to charge you should any repairs they perform after an accident be connected to maintenance or parts that you would normally replace during the car’s life (e.g. exhaust or tyres).

The next exclusion clause is related to deception. Should a thief deceive you into parting with your car for nothing you can’t claim. When buying a car be careful about the confidence trick of selling you a stolen car and then stealing it back once your money is in their hands. Since you did not obtain ‘title’ to the car you had no insurable interest so you can’t claim.

You are also not covered for depreciation that occurs to the car’s value simply due to it being involved in an accident. This tends to be more of a problem with high value models.

Find out how your audio and communication equipment is covered. This varies from insurer to insurer. Some will pay out the full amount, whilst others have limits. This is the same for many of your personal effects. Insurers will not cover you for valuables in the car, and usually have a $100 or $150 limit. Bear in mind that you can’t just claim for personal effects, it must be part of another claim.

House insurance covers the loss of your home and belongings through theft, fire and other events. Coverage will vary from one policy to the next however, in general terms, a plan will provide cover for all or part of the cost involved when your property or belongings are stolen, damaged or destroyed.

It is impossible to list precisely what will be covered by your insurance plan here as this will depend upon the insurance firm selected and the conditions of your particular plan. Just about all plans will however give cover for some or all of the following events:

Fire

Smoke

Ice, snow, or sleet weighing on vehicles

Freezing of plumbing

Heating system malfunction

Volcano

Lightning

Flooding due to plumbing overflow

Windstorm

Theft, including check forgery and counterfeit currency

Power surges

Unauthorized use of credit cards

Hail

Vandalism

Explosion

Riot

Falling objects

Hot water heater bursting

There are a number of different types of home insurance plan, usually called a ‘form’ and the most commonly available forms are:

The Dwelling Fire Form

This particular sort of home insurance plan provides cover for merely your dwelling and does not offer cover for your personal belongings. As well, it does not give cover for your personal liability. As its name might suggest it only offers cover for limited events which ordinarily extend to fire, smoke, hail, windstorm, lightening, explosion, vehicles and civil unrest.

The Basic Form

This sort of home insurance extends your cover to take in the theft of your personal belongings and also vandalism.

The Modified Coverage Form

The modified coverage form provides cover which is identical to that provided under the basic form but this type of cover is applied to older properties where rebuilding costs are greater than the market value of the property.

The Broad Form

The broad form of home insurance extends cover beyond that seen in the basic form to include damage caused by falling trees and other objects; damages caused by the weight of snow, ice and sleet and the freezing, rupturing or sudden accidental overflow of a air conditioning, heating, plumbing or fire sprinkler system or another household appliance.

The Special Form

The special form is the most popular form of home insurance and covers you against all hazards unless they are excluded specifically within the conditions of the plan. Risks which are commonly excluded include earthquake, flood, war and nuclear accident.

As well as the forms of home insurance listed here there is also the tenants form insurance for renters and the condominium unit owners form for owners and occupiers of condominiums. In addition, owners of townhouses can purchase an individual plan or might be able to take cover from an association master plan. Lastly, in the majority of states owners of mobile homes whose home has wheels and does not sit on a permanent foundation will have to purchase auto insurance rather than home insurance.